Category: Budgeting

Many of us like to get away for a holiday so that we can relax and forget about our day to day problems. It can be a great way to wind down from work and home life, bond with the family as well as an opportunity to explore new places and have new experiences. However, holidays can come at a high price. You will have to pay to travel to wherever you are going and then for the accommodation and food. Then it is likely that you will treat yourself more than normal, you might want more for entertainment, you may eat out more and drink more and you may even buy new clothes and/or luggage for the trip. All in all it can be very costly.

Many people do not think too hard about paying or their holiday, they book it and then just pay it with a credit card or use an overdraft to cover the cost. Some may even take out a personal loan to pay for it or borrow the money from friends or family. However, which of these, if any is the best way to pay for the holiday?

It is worth thinking about the costs of borrowing money without a credit check when planning how to pay for your holiday. If you borrow money to pay for it, then you will be paying extra for the holiday as you will be paying interest on the loan on top. You may not mind and you may think that the holiday is worth paying that extra money for. However, you should try to make sure that you get the best deal if you are paying this way. Compare the costs of borrowing across the different types of loans as well as between the different lenders to make sure that you are not paying more than necessary. You could save a significant amount of money by doing this and it is well worth the effort. Even if you borrow from friends and family and do not pay interest, you still have to find the money to pay them back from somewhere.

It is wise to think about the different ways that the loans are repaid. A monthly repayment schedule is what you will get with a personal loan, but with a credit card you can just pay a very small amount each month and not pay the remaining balance for as long as you wish. With an overdraft it will just be paid when you credit the account with some money. It worth thinking about which repayment method might be best for you. If you have monthly repayments, then you will need to make sure that you will have enough money free each month to be able to cover those repayments even if interest rates go up and they rise. If you have an overdraft then you will need to make sure that when the money is paid off you will be able to manage on what is left or else you may end up going overdrawn again and this could become a monthly trend, which can be extremely expensive. If you have a credit card, then it can be tempting to keep paying off the very minimum but this can work out very expensive as the loan continues for a long time and that means that lots of monthly interest payments have to be covered and they can add up to a lot.

If you want to save money and keep the costs down, then it could be wise to not borrow money to pay for the holiday at all. Saving up for it or using savings that you have to pay will mean that you will not need to worry about interest payments and other loan costs. It is worth remembering that the goal of a holiday is often to forget reduce stress but if you have the stress of a loan to return to, then this could mean that you soon stop relaxing and start worrying. However, some people do not worry about loans and do not find it stressful. So you need to think about what would be the best solution for you, not just considering how you stand financially but also with regards to any stress that may be caused by getting a loan.